Skip to main content
Fachgebiete
Automobil + Motoren Bauwesen + Immobilien Business IT + Informatik Elektrotechnik + Elektronik Energie + Nachhaltigkeit Finance + Banking Management + Führung Marketing + Vertrieb Maschinenbau + Werkstoffe Versicherung + Risiko
DE
EN
Bücher
Zeitschriften
Themenseiten
Organisationspsychologie Projektmanagement Marketing Smart Manufacturing
Weitere Formate
Podcasts Webinare Technik Webinare Wirtschaft Kongresse Veranstaltungskalender Awards
Jetzt Einzelzugang starten
Zugang für Unternehmen
Referenzkunden
SLX-Digitalkonferenz: Zukunftswerkstatt 2024

Mehr Umsatz mit Top-Kontakten

Am 7. Mai erfahren Sie, wie Vertriebsteams Leadgenerierung, Leadnurturing und Leadstrategien effizient steuern können.
Erweiterte Suche
Anmelden
nach oben
Journal of Business Ethics
Erschienen in: Journal of Business Ethics 1/2020

02.03.2019 | Original Paper

The Hausmann–Gorky Effect

Erschienen in: Journal of Business Ethics | Ausgabe 1/2020

Einloggen

Aktivieren Sie unsere intelligente Suche, um passende Fachinhalte oder Patente zu finden.

search-config
loading …

Abstract

On May 26, 2017, Harvard economist Ricardo Hausmann published an Op Ed titled “Hunger Bonds”, urging investors to avoid Venezuelan sovereign bonds on the grounds that the country was prioritizing payments on the bonds over remedying a humanitarian crisis. Contemporaneously, news emerged regarding a suspicious looking bond issue by Venezuela’s oil company that was purchased largely by Goldman Sachs. That bond got tagged with the label “Hunger Bond”, and suffered a price hit. Using both quantitative data and interviews with investors, we examine the causes of the Hunger Bond penalty, its impact on the prices of other outstanding Venezuelan bonds, and how long it was sustained. The primary determinants of the Hunger Bond penalty appear to have been a combination of negative press attention and crowd-sourced disapproval. For instance, we show that a large number of Google searches for “Hunger Bonds” are associated with a 200 basis point increase in the spread of the bond purchased by Goldman Sachs.
Vorheriger Artikel Is It Ethical for For-profit Firms to Practice a Religion? A Rawlsian Thought Experiment
Nächster Artikel Review of The Code of Capital: How the Law Creates Wealth and Inequality by Katharina Pistor

Sie haben noch keine Lizenz? Dann Informieren Sie sich jetzt über unsere Produkte:

Springer Professional "Wirtschaft+Technik"

Online-Abonnement

Mit Springer Professional "Wirtschaft+Technik" erhalten Sie Zugriff auf:

  • über 102.000 Bücher
  • über 537 Zeitschriften

aus folgenden Fachgebieten:

  • Automobil + Motoren
  • Bauwesen + Immobilien
  • Business IT + Informatik
  • Elektrotechnik + Elektronik
  • Energie + Nachhaltigkeit
  • Finance + Banking
  • Management + Führung
  • Marketing + Vertrieb
  • Maschinenbau + Werkstoffe
  • Versicherung + Risiko

Jetzt Wissensvorsprung sichern!

Jetzt informieren

Springer Professional "Wirtschaft"

Online-Abonnement

Mit Springer Professional "Wirtschaft" erhalten Sie Zugriff auf:

  • über 67.000 Bücher
  • über 340 Zeitschriften

aus folgenden Fachgebieten:

  • Bauwesen + Immobilien
  • Business IT + Informatik
  • Finance + Banking
  • Management + Führung
  • Marketing + Vertrieb
  • Versicherung + Risiko




Jetzt Wissensvorsprung sichern!

Jetzt informieren
Anhänge
Nur mit Berechtigung zugänglich
Fußnoten
1
For skeptics from the economic perspective, who point to implementation barriers and possible collateral damage, see Rajan (2004); Choi and Posner (2007); and Janus (2012).
 
2
To quote from two prominent legal commentators:Anna Gelpern writes:
[N]o national or international tribunal has ever cited Odious Debt as grounds for invalidating a sovereign obligation. Each of the treaties and other examples of state practice cited even by the doctrine’s most thorough and principled advocates appears fundamentally flawed-it lacks one or more of the doctrine’s essential elements and/or is accompanied by a chorus of specific disavowals of the doctrine by indispensable parties. But even if the examples were on point, the fact that Odious Debt’s most fervent proponents to this day must cite an 1898 treaty and a 1923 arbitration as their best authorities suggests that the law-making project is in trouble.
Gelpern (2005, p. 406).
Christoph Paulus writes:
The present article addresses itself exactly to [the] task [of analyzing the historical basis for a doctrine of Odious Debts] and comes to the conclusion that the remarkable inconsistencies within this historical development in addition with the almost complete lack of any explicit case material lead to the result that there is no such legal concept of odious debts.
Paulus (2007, abstract). For optimistic perspectives on the existence of an Odious Debt doctrine, see Howse (2007) and King (2016).
 
3
We emailed and asked him specifically and he responded that he had known nothing about the GSAM purchase at the time he wrote the Hunger Bonds piece—he only learned of it two days later from a Wall Street Journal piece that he then tweeted.
 
4
Note that the first bond is closer in maturity with respect to the Hunger Bond but it has a much higher coupon (12 ¾% instead of 6%). The second bond has longer maturity but the same coupon (6%). In theory, when comparing spreads the coupon should not make a big difference. However, the coupon changes the duration of the bond and may become important in the presence of high default risk.
 
5
To quote the opening paragraph of a World Bank report on the topic:
The last few years have seen a rising chorus of demands from non-governmental and civil society organizations for the cancellation of the sovereign debt of many developing countries on the grounds that such debt is “odious”. Yet there is little agreement on a workable definition of “odious” debts. This should hardly be surprising, because those promoting the cancellation of “odious” debts are doing so for a variety of reasons, often pursuing widely differing aims.
(Nehru and Thomas 2008).
 
6
A complication here is whether a successor regime can use the “unclean hands” (in pari delicto) defense to defend actions by its predecessor regime. In the corporate context, this has been held to be possible in at least some contexts such as that of a receiver in bankruptcy. See Scholes v. Lehmann, 56 F.3d 750, 752–753 (7th Cir. 1995) (Posner, J.); see also Buchheit et al. 2007, pp. 1257–1258. But the claim appears less likely to work in the sovereign context where a new government is trying to defend against paying the obligations of a misbehaving predecessor government. See Republic of Iraq. v. ABB et al., 768 F.3d 145 (2d. Cir. 2014). So, ultimately, this may boil down to whether the court in question sees PDVSA as a separate enough entity from the Republic to view it as a corporation or sees it as essentially the sovereign.
 
7
In effect, assuming a default, the later creditor with the inflated principal amount obtains a type of structural priority over prior creditors by taking a disproportionate share of the limited set of assets that the distressed debtor has. Scholars of sovereign debt have flagged this debt dilution scenario as a potential problem in settings where there is no enforceable formal priority structure for debt, but this is one of the few concrete examples we have seen. See Weidemaier and Block-Lieb (2018); Bolton and Jeanne (2009).
 
8
The two events we examine are: (a) when the US Treasury Department, on August 25, 2017 put out a list of bonds, trading in which was exempt from sanctions, and failed to exclude the Hunger Bonds (a matter which was rumored to have been discussed at the US Treasury department) and (b) when, on November 28, 2017, after credit default swaps had been triggered for PDVSA, the International Swap Dealers Association (ISDA) determined that one of the bonds that could be delivered into the auction was the Hunger Bond—in effect, therefore, making a determination that whatever taint that these bonds had, they were still acceptable for purposes of a generic CDS contract written on a package of PDVSA bonds. We pick these events because they are the two that the financial press commented on in the context of the Hunger Bonds not being singled out either for sanctions or as ineligible for delivery in the CDS auction. (Tanzi and Bartenstein 2017).
 
9
Investors and asset managers repeatedly told us that, because of the large difference in coupon (6% versus 12.75%), the February 2022 bond was not directly comparable to the Hunger Bond. While the Hunger Bond had a higher spread than the February 2022 Bond until late July, after the Venezuelan strikes of July 17 and the US threat of sanctions, the price of the February 2022 bonds decreased at a faster rate than the price of the Hunger Bond. On July 20, the spread of the February bond surpassed that of the Hunger Bond. The differential between the two 2022 bonds then peaked after the imposition of sanctions on President Maduro on July 31st. The two 2022 bonds went back to trading at a similar spread in August 15.
 
10
The title of Bloomberg’s piece says it all: “Goldman’s Hunger Bonds Dodge U.S. Sanctions That Bypass Traders”. (Tanzi and Bartenstein 2017).
 
11
We obtain similar results if we use yields instead of spreads. All results are robust to estimating the model with Newey-West Standard errors and with a GARCH(1,1) model. We pretested the series for stationarity and find that the hypothesis that spreads have a unit root can be rejected at the 5% confidence level but cannot be rejected at the 1% confidence level (we use a model with two lags and a deterministic trend). The KPSS test, instead, suggests that the series are stationary.
 
12
These events are: (i) the publication of Hausmann’s article in May 2017; (ii) the strikes of July 19, 2017; (ii) the imposition of sanctions on President Maduro (August 2, 2017); (iv) the exemption of the Hunger Bond from US sanctions (August 25, 2017); (v) President Maduro’s speech about the likely restructuring Venezuela’s debt (November 2, 2017); (vi) Venezuela classified in selective default (November 13, 2017); (vii) ISDA’s inclusion of the Hunger Bond in a list of bonds that are acceptable for the purposes of a generic CDS contract written on a package of PDVSA bonds (November 28, 2017); and (viii) the auction of December 13.
 
13
The advantage of a comparator bond of a somewhat longer maturity is that the difference in spreads cannot be attributed to the fact that expectations of default have a smaller effect on the yields of bonds that are close to maturity. Our thanks to one of our referees for this point.
 
14
We do not report the full regression results to save space (full results are available in the working paper version of this article, see Gulati and Panizza (2018a)) but also because standard stationarity tests suggest that bond prices may be better described as a unit root process.
 
15
Results available upon request.
 
16
As of this writing, we are attempting to investigate the puzzle here further.
 
17
Some some small loans (as opposed to bonds) might have slipped the scrutiny of social media though. As we were doing our final revisions on this article, a reporter at a major financial news agency pointed us to an article in an obscure Spanish language publication describing a transaction very similar to the Hunger Bond one. See Petit (2018).
 
18
M. Gorky, “Pas un sou au gouvernement russe”, L’Humanité, 9 April 1906.
 
19
5/95 = 0.052 and 5.5/95 = 0.058.
 
Literatur
Bolton, P., & Jeanne, O. (2009). Structuring and restructuring sovereign debt: The role of seniority. Review of Economic Studies, 76(3), 879–902.CrossRef
Bolton, P., & Skeel, D. (2007). Odious debts or odious regimes. Law and Contemporary Problems, 70, 83–108.
Buchheit, L. C., & Gulati, M. (2018b). Deterring holdout creditors in a restructuring of PDVSA bonds and promissory notes. Capital Markets Law Journal, 13(2), 148–151.CrossRef
Buchheit, L. C., Gulati, M., & Thompson, R. B. (2007). The dilemma of odious debts. Duke Law Journal, 56, 1201–1262.
Carletti, E., Colla, P., Gulati, M., & Ongena S. (2017). Pricing contract terms in a crisis: Venezuelan bonds in 2016. Capital Markets Law Journal, 11(4), 540–555.CrossRef
Center for Global Development. (2010). Preventing odious obligations: A new tool for protecting citizens from illegitimate regimes. Washington, DC: Center for Global Development.
Choi, A., & Posner, E. (2007). A critique of the odious debt doctrine. Law and Contemporary Problems, 70, 33–52.
Collet, S. (2013). How big is the penalty for unfair debt? The case of cuban bonds at the time of independence. European Review of Economic History, 17(3), 364–387.CrossRef
Crooks, N. (2017). Harvard’s Hausmann asks JP Morgan to cut venezuela from index. Bloomberg, May 26.
Gelpern, A. (2005). What Iraq and Argentina might learn from each other. Chicago Journal of International Law, 6(1), 391–414.
Gillespie, P. (2017). Venezuelans are outraged at goldman sachs. CNN Money, May 30.
Gosseries, A. (2007). Should they honor the promises of their parents’ leaders?. Ethics and International Affairs, 21(s1), 99–125.CrossRef
Janus, T. (2012). Odious debt in an imperfect world. Review of Development Economics, 16(2), 305–317.CrossRef
Jayachandran, S., & Kremer, M. (2006). Odious debt. American Economic Review, 96(1), 82–92.CrossRef
King, J. (2016). The doctrine of odious debt in international law. A restatement. Cambridge: Cambridge University Press.CrossRef
Lienau, O. (2014). Rethinking sovereign debt. Cambridge: Harvard University Press.CrossRef
Ludington, S., Gulati, M., & Brophy, A. L. (2010). Applied legal history: Demystifying the doctrine of odious debts. Theoretical Inquiries in Law, 11(1), 247–281.CrossRef
Oosterlinck, K. (2016). Hope springs eternal. French bondholders and the repudiation of Russian Sovereign debt. New Haven: Yale University Press.CrossRef
Perez, L., & Weissman, D. (2007). Public power and private purpose: Odious debt and the political economy of hegemony. North Carolina Journal of International Law and Commercial Regulation, 32, 699–746.
Rajan, R. (2004). Odious or just malodorous, Finance and Development (IMF Publication) 54–57.
Salkever, D. (1976). The use of dummy variables to compute predictions, prediction errors, and confidence intervals. Journal of Econometrics, 4(4), 393–397.CrossRef
Tanzi, C. J. (2017). Why critics call Venezuela’s debt ‘Hunger Bonds’: Quick take. Bloomberg, June 1.
Tanzi, C. J., & Bartenstein, B. (2017). Goldman’s Hunger Bonds dodge U.S. sanctions that bypass traders, August 25.
Tanzi, C. J., & Soto, N. (2017). Venezuela opposition say ‘Hunger Bonds’ pay for Russia weapons. Bloomberg, June 1.
Tanzi, C. J., & Zerpa, F. (2017). Goldman sachs just ignited the Venezuela ‘Hunger Bonds’ movement. Bloomberg, May 31.
Vyas, K., & Kurmanaev, A. (2017). Goldman sachs bought Venezuela’s state oil company’s bonds last week. Wall Street Journal, May 28.
Weidemaier, W. M. C., & Block-Lieb, S. (2018). Lenders’ roles and responsibilities in sovereign debt markets. Illinois Law Review (forthcoming).
Weidemaier, W. M. C., & Gauthier, M. (2017). Venezuela as a case study in (limited) sovereign liability. Capital Markets Law Journal, 12(2), 215–223.CrossRef
Wigglesworth, R., & Long, G. (2017). Why Goldman’s Venezuela bond trade sparked controversy. Financial Times, June 1.
Wigglesworth, R., & Platt, E. (2017). Credit Suisse institutes trader ban on Venezuela bonds. Financial Times, August 10.
Zettelmeyer, J., Trebesch, C., & Gulati, M. (2013). Greek debt restructuring: An autopsy. Economic Policy, 75(1), 513–563.CrossRef
Metadaten
Titel
The Hausmann–Gorky Effect
Publikationsdatum
02.03.2019
Erschienen in
Journal of Business Ethics / Ausgabe 1/2020
Print ISSN: 0167-4544
Elektronische ISSN: 1573-0697
DOI
https://doi.org/10.1007/s10551-019-04132-9

Weitere Artikel der Ausgabe 1/2020

Journal of Business Ethics 1/2020 Zur Ausgabe

Editorial

Some Musings About the Future of Business Ethics Scholarship

Original Paper

Mapping the Intellectual Structure of Social Entrepreneurship Research: A Citation/Co-citation Analysis

Original Paper

From Jensen to Jensen: Mechanistic Management Education or Humanistic Management Learning?

Original Paper

A Stakeholder Theory Perspective on Business Models: Value Creation for Sustainability

Original Paper

Somebody That I Used to Know: The Immediate and Long-Term Effects of Social Identity in Post-disaster Business Communities

Original Paper

‘Alternative Hedonism’: Exploring the Role of Pleasure in Moral Markets

Premium Partner

    Bildnachweise